The composition and performance evaluation of the board is critical to corporate governance. Corporate governance, on the other hand, is crucial to the management of an organisation. Management, on its part, is the backbone of any organisation. This is to imply that the quality of the board determines the overall performance of an organisation.
Therefore, it is absolutely necessary for the board to look at (evaluate) themselves. The importance of the self-evaluation is to purposefully reveal as well as surmount any barriers that might be affecting their effectiveness. This can send a signal to the entire organisation that the board is committed to doing its best.
There are multiple benefits that come with board evaluations. For one, good governance is easy to achieve. On the other hand, a proper evaluation can improve performance in different levels such as individual, board and organisation tiers.
Below is an outline of three important factors that a board should assess during its self-evaluation:
How it leads
In this section, the board leadership is evaluated on its effectiveness, including the committee chairs and lead independent directors. They are examined in the basis of how they were chosen, their skills and/or experiences as well as their leadership styles.
The individuals should be appointed according to their skill sets to determine their suitability. This prevents default appointment of board members (and leadership inadequacy).
How it manages
Under this section, the board evaluates the manner in which it conducts its meetings. In it, the meetings are scrutinised on whether they encourage the participation by all members, if there is honest exchange of ideas and if they are geared towards maximum productivity. Again, the evaluation must determine whether the meetings have clear solutions for the raised issues which affect the organisation.
In such evaluations, it is critical to find out if some board members are uncomfortable when expressing their opinions. Matters like these should be discussed since they are detrimental to decision-making processes.
How it contributes
The final aspect of the evaluation that the board should consider is the way that members interact. This includes the participation of the directors and how decisions are made. In the light of this, every member should be scrutinised on the expertise and knowledge they bring as well as their way of contributing to the board.
In matters of interaction, behaviour such as staying engaged, framing content constructively, building on others’ ideas and asking the right questions should be considered. Positive behaviour attracts the attention of all board members and management as well as demonstrates that the aim of every member is not to “win” and argument but to contribute to the well-being of the organization.
Board self-evaluations, if properly done, can unravel areas of weaknesses and strengths. This can lead organizations to make adjustments that impact positively in shareholder value and performance. It is the best way to influence good leadership and organizational success from the top.